Cloud Computing: What Accountants Need to Know
Alexandra DeFelice · Journal of accountancy online/Journal of accountancy · 2010
EXECUTIVE SUMMARY * An increasing number of applications that accountants and their clients need to conduct business are available in the cloud. These include, but are not limited to, bill management, enterprise resource planning applications, payroll, sales tax, tax preparation and workflow. * Worldwide, revenue from services is forecast to reach $68.3 billion in 2010, according to analyst firm Gartner Inc. * The cloud services industry is poised for strong growth through 2014, when worldwide cloud services revenue is projected to reach $148.8 billion, with the financial services and manufacturing industries being the largest early adopters of cloud services. * Benefits of working in the cloud include quick implementation, anytime access, lower upfront and maintenance costs, and easier and more frequent updates. * Security and reliability remain top concerns for CPAs switching to a cloud environment. There are several questions you should ask a potential vendor before making an investment in their products to ensure these concerns are minimized. ********** [ILLUSTRATION OMITTED] There's no arguing that is gaining a great deal of momentum. Worldwide, cloud services revenue is forecast to reach $68.3 billion in 2010, a 16.6% increase from 2009 revenue of $58.6 billion, according to analyst firm Gartner Inc. So what does this mean to the accounting profession? What are the benefits and risks? Who are the vendors in the proverbial sky, and how do you know you can trust them with your data--or your clients' data, for that matter? This article answers some of those questions and explains the history and future of the cloud. The easiest way to think about cloud computing is as doing business on the Web, therefore eliminating the need for in-house technology infrastructure--servers and software to purchase, run and maintain. Unlike traditional software, which is distributed and deployed on-premise, cloud applications are designed for Web deployment. They are multitenant (delivered by one vendor to many customers), and users share processing power and space that is managed by the vendor. Terms including Software-as-a-Service, or SaaS, and application service provider (ASP) often are connected to cloud com puling in presentations and articles, but there are subtle differences between them. (For an explanation, see the Definitions box accompanying this article.) The types of applications available run the gamut-from tax software to payroll to full enterprise resource planning (ERP) systems--and most often are leased on a subscription model instead of purchasing licenses. DOING BUSINESS IN THE CLOUD Is it worth making the switch? Vendors and analysts point to several benefits to switching to a cloud environment. * Quick implementation process. Most vendors claim their applications can be up and running in a few minutes because there is no software to install. The implementation process also is easier for companies with multiple locations or remote workers to all have access to the same version of the application simultaneously. * Anytime access from anywhere with an Internet connection, which again includes the ability for employees to work remotely. * Lower upfront costs. Instead of paying a license fee and for annual maintenance, most models allow users to pay as they go (usually monthly, though some require annual contracts). They can pay per user and easily add more users. Vendors can offer their products at a lower cost in this situation because their systems are built to allow several customers to share infrastructure (both servers and storage areas) in a way that is transparent to users and does not allow those customers access to each other's data. It may be difficult to conduct a cost comparison of doing business on-premise versus in the cloud unless a company has moved all its business off-premise. …